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Trump’s Trans-Pacific Partnership veto could soil the future for farmers

Mark Weinraub

10 Feb 2017

Trump arrives to participate in a round-table discussion with farmers at a farm market in Boynton Beach, Florida
Photographer: Jonathan Ernst

Now  that President Trump has abandoned the Trans-Pacific Partnership, what is next for an American agricultural industry increasingly reliant on exports?

America’s farmers are facing an uncertain outlook after missing out on a potential US$4.4 billion a year boost from the proposed Trans-Pacific Partnership (TPP).

Following Donald Trump’s decision to withdraw the U.S. from the 12-nation TPP trade pact, attention has turned to what might take its place and whether other countries will now have better access to key markets such as China.

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The American Farm Bureau Federation has urged the Trump administration to do all it can to “develop new markets for U.S. agricultural goods and to protect and advance U.S. agricultural interests in the critical Asia-Pacific region”.

Trump

Job market fear

The group, which forecast TPP would have added $4.4 billion a year to the agricultural economy, pointed out that the North American Free Trade Agreement (NAFTA) had helped exports to Canada and Mexico quadruple to over $38 billion since 1993.

But President Trump claimed the TPP deal would have hurt the U.S. jobs market, adding that he preferred to strike trade pacts with individual countries. He is also expected to reneogtiate NAFTA in an effort to secure more favorable terms to the U.S.

Having voiced his opposition to TPP in the run-up to the Presidential election, Trump won nearly two-thirds of the rural vote in November, with big agricultural states including Iowa, Nebraska, Ohio and Indiana all lining up for the Republican.

TPP exports

More than 25% of all U.S. agricultural production ultimately goes to markets outside America’s borders.

And with the U.S. a net exporter of agricultural goods and shipments to the other 11 countries in the TPP, this trade alone totaled almost $62 billion in 2015.

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The Obama administration had touted TPP as a trigger for further gains, while at its annual Outlook Forum in 2016 the U.S. Department of Agriculture themed its trade-related sessions “U.S. Exports in the warm glow of a completed Trans-Pacific Partnership”.

Soybean strength

“The TPP held great promise for us, and has been a key priority for several years now. We’re very disappointed to see the withdrawal,” said Ron Moore, president of the American Soybean Association.

Soybeans have been a rare bright spot in the struggling agriculture sector and even helped boost overall U.S. economic growth at a time when prices for most crops have faded.

But strength in the oilseed’s price was largely due to overseas demand. A 10 percent jump in soybean shipments during the third quarter helped spur the biggest gross domestic product gains in two years.

Some 60 percent of the United States’ exported volume will land in China, the world’s largest soybean buyer.

The USDA expects 2016-2017 soy exports to hit a record 2.05 billion bushels, accounting for nearly half of the recently harvested U.S. crop.

China competition

U.S. farmers and trade groups are also concerned that backing out of the deal could provide other countries with better access to China, a major agriculture goods importer that was not part of the TPP negotiations.

Joel Newman, president and chief executive of the American Feed Industry Association, said: “Mounting competition and new trade agreements within that region that exclude the U.S. continue to block opportunities for the U.S. feed industry to capture this demand.”

Australia and New Zealand have said they hope to encourage China and other Asian countries to join the trade pact.

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Meat exports

The U.S. Meat Export Federation, a trade group that promotes sales of U.S. meat overseas, wants to hear details on what the Trump administration plans to do to improve trade now that TPP in the United States is officially dead.

It pointed out that trading partners in NAFTA and the proposed TPP accounted for more than 60 percent of U.S. red meat exports.

Philip Seng, the federation’s chief executive, said: “We urge the new administration to utilize all means available to return the United States to a competitive position, so that our industry can continue to serve this important international customer base and further expand our export opportunities.”

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U.S. meat exporters could have made their biggest potential gains in Japan, which bought $2.88 billion of U.S. beef and pork in 2015, and Vietnam if TPP had been implemented, said Joe Schuele, federation spokesman.

“We look at access to the Asia Pacific region as being very, very important to both the beef and pork industries,” Schuele said.

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